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Hospitality Investors Trust, Inc., Shareholders May Have Recovery Options

Feb. 12, 2021 12:55 PM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.


  • Concerned about your investment in Hospitality Investors Trust?

The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended Hospitality Investors Trust Inc. to investors. If you are concerned about Hospitality Investors Trust losses, the securities attorneys at The White Law Group may be able to help.

Hospitality Investors Trust (HIT REIT), formerly known as American Realty Capital Hospitality Trust, launched its offering in January 2014 and suspended sales activities in November 2015 after raising $911 million in investor equity, according to reports.

HIT REIT has just signed a forbearance agreement with lenders relating to the Georgia Tech Hotel & Conference Center located in Midtown Atlanta, according to filings with the SEC.

The REIT’s leasehold interest in the hotel was part of a six-hotel portfolio acquisition from 2014. HIT REIT reportedly notified the ground lessor that it will discontinue paying rent beginning on February 1, 2021.

According to the filings, the REIT noted that the hotel’s operating expenses have exceeded revenues since the beginning of the coronavirus global pandemic, and that the actions constitute defaults and could result in the termination of the ground lease interest in the hotel and the forfeiture of any equity in the investment.

We previously reported that due to the impact of the coronavirus pandemic, the REIT did not expect to have sufficient cash on hand to continue to pay its current obligations during the first half of 2021.

Risks of Non-traded REITs

Non-traded REITs like Hospitality Investors Trust Inc. often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one may suffer significant losses on the sale.

According to Central Trade & Transfer, a secondary market for private placements, shares of HIT REIT were recently sold for just $0.75/share. It appears that the secondary market price would represent huge losses for investors, since the original offering price was $25.00/share.

Non-traded real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex. They are often better suited for sophisticated and institutional investors.

Brokers have an obligation to make investment recommendations that are suitable for their clients. They must consider their risk tolerance, net worth, investment objectives and experience in the market.

Unfortunately, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations. Brokers earn as much as 15% commission for selling REITs.

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.

Free Consultation with a Securities Attorney

If you are concerned about Hospitality Investors Trust, The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

For a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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